With nearly 1 billion Instagram users as of 2019, this app has taken the social media world by storm in the past few years. The photo-sharing app is a great way to interact with people, but businesses of all sizes also use it to reach out to their target audience, increase engagement, raise brand awareness, and alternative sales funnel.
If you use Instagram properly, you can earn significant revenue through the social media platform without spending a lot. It is a great place to market your brand and products and generate website traffic.
Read ahead to see how much Instagram ads cost, the factors that influence these costs, and why it is necessary to use this platform to reach people.
Instagram is a massively successful platform that businesses take advantage of to grow their awareness. They use visual content such as pictures and short videos to advertise their brand through different campaigns.
An Instagram ad campaign launch instagram ads works well with a Facebook ad account. You can use your already existing one for Facebook promotional purposes or create a new Instagram business. However, it is better to use an Instagram account to understand your target audiences’ wants to increase your organic marketing efforts.
Facebook Power Editor and Instagram Ads Manager manage all Instagram ads considering your budget, time frame, optimization goals, and audience.
Your brand’s campaign objective determines the number of call-to-action (CTA) button options you can have on your Instagram ads. However, this number cannot be more than eighteen. Furthermore, the ads can have a website link, application download options, and online shopping options.
Social media marketing is at the top of its game in this day and age because of the billions of social media platforms’ users. Since Instagram is a popular app, there are several reasons why investing in its ads will be advantageous for your business.
Instagram has become a massively popular app, faring close to YouTube and Facebook. For your businesses’ purposes, you have to determine your audience’s percentage to respond to it. With so many Instagram influencers, you can reach out to them to influence their followers to consider your brand.
However, you can target the small-scale influencers instead of the big names to drive more engagement with the followers. This is because these influencers share a trusted bond with their intimate community of followers. When they recommend your brand to others, it sounds more trustworthy than selling it like an ad.
At present, your organic posts cannot have clickable links on Instagram. The app allows you to add a link in your message or caption, but you can either access it through their bios or copy-pasting the link in your browser.
You can add external links in Instagram advertising, allowing you to create designated destination URLs that lead to your website. Using your domain with an implemented Pixel enables you to monitor the website traffic your Instagram advertisements generate, which is not usually present on external website URLs.
Once you’ve created your brand’s presence, interested customers will want to know details about your brand and the products or services you sell. This allows you to tell them your story in instagram stories or by any another way and impress them to drive more conversions.
As a result, Instagram Advertising drive more traffic towards your website because of its billions of users discovering new products every day, making it possible for you to engage with more of your target audience.
As an Instagram user, you might have noticed that thousands of small and big brands use the platform for their business purposes. Some use it as an additional channel and their websites, while others rely solely on selling their products and services.
One of the most significant investments comes from brick-and-mortar businesses such as Nike. It focuses on Instagram to boost its sales, with the campaign focusing on customer relationships to build engagement and create trust in them towards the brand for better sales.
Instagram is an essential marketing tool today, even if you don’t want to use it for direct sales. It is relevant to many of the world’s population, and most businesses use this fact to advance their business. You have to reach out to your audience, and using Instagram in the right way can help you gain a competitive edge.
Instagram can act as a sales funnel and improve your revenue by working as an alternative market area to represent your brand and attract buyers.
Instagram is a great way to stay updated on what your competition is doing. You can follow your competitors, customer base, and approach to draw people in through the platform.
Keeping track of what others are doing and meeting the customers’ expectations is essential. You can learn from your rivals and their successful and unsuccessful campaigns to keep people interested.
Instagram Ads with destination URLs have a link click CPC (cost-per-click) range of about $0.5 to $0.95. For all metrics, the range is between $0.4 to $0.7, which involves all the clicks that an ad gets, including link clicks, comments, likes, average instagram cpm and shares.
Your instagram ad prices/ instagram ads cost depends on several variables. Your campaign objectives automatically increase or decrease, Your instagram ads cost depends on what you select (ad quality) and its link to the target instagram users engage/audience’s position in the funnel.
For instance, if your paid advertising/online advertising campaign objective is brand awareness, its cost will be less than something further down the funnel with a better value objective, like conversions. With a broad and cold audience, your chances of increasing your brand awareness may be less than those familiar with your business and what it offers. They are more likely to purchase from you or carry out some higher value action related to your campaign.
Your audience’s size also impacts your ad pricing. With a more significant audience target, the ad prices are lower due to lesser competition. However, as the audience becomes narrower with geotarget, the costs increase as their competition also rises.
Furthermore, your Click-Through-Rate (CTR) also impacts your ad pricing. With a lower CTR, the system might believe there is a disconnect between the target audience and the messages in your ad, resulting in higher costs. Your ads should be relevant to your target audience, and the CTR indicates the relevancy.
Four factors influence the Instagram advertising campaign costs:
The relevancy score is the relevancy Instagram attaches to your ad, considering your audience, determining its cost. Since Instagram wants to display relevant ads to people on their instagram feed, your score is decided by how people react to your ad.
The relevancy score will be higher with private responses to your ad such as commenting, clicking, liking, etc. But for ad hiding, you get a negative response, resulting in a lower score and decreasing your ad performance.
Naturally, ads that get a higher relevancy score get positioned over the lower ones. A more relevant ad results in you paying almost the minimum amount required to get higher clicks and more leads.
The amount you decide to pay for your leads determines how much you spend on your campaigns. Similarly, your bid amount also decides the money you spend on your ads.
You’ll have to pay more for clicks and impressions because Instagram has greater bid amounts. As a result, if your budget is only $1,000 and the bid amount is $5 per click, your ad will only receive 200 clicks. But, with a $2,000 budget and $5 CPC, you’ll get 400 clicks. If your bid amount is $0.8, you’ll get even more clicks for both scenarios.
Your bid amount impacts your budget and vice versa. These decide how much it will cost for advertising on Instagram.
Your Instagram advertising costs are dependent on your competition. For any product you sell, you have to reach your target audience, which your competitors are also targeting. As a result, your competitors influence the amount you spend on your campaigns.
With more people bidding for the same audience, a bidding war can arise where companies bid to get leverage over one another, possibly resulting in your CPC increasing as you bid against your competitors.
These rates impact your Instagram ads campaign prices based on the probability that people will act on your ad. Instagram wants to know the likeliness of your audience engaging with your ad.
Engagement actions include clicks and conversions, so Instagram promotes ads that are more likely to engage people and make them interact with the content you provide. The estimated action rates impact the Instagram ad cost.
Advertising can be expensive, yet it is essential to build brand awareness. As a result, you have to learn to manage the Instagram ads properly to get the most out of your social media marketing campaigns on a smaller budget.
To make your Instagram ads cost-effective, you have to be clear of your business goals and use careful targeting to avoid overspending. Use automatic bidding, so you don’t make costly mistakes throughout the learning process of using the platform.
If you create a preset daily budget, you won’t cross this limit, and the automatic bidding helps you stick with the fixed costs you’ve set for the Instagram ads for every month.
Furthermore, you can create particular landing pages with content related to your ad to maintain high-quality scores. Create a home page that has different types of information which is not particularly relevant to your ads.
You should test your ad copy and nail its relevance to decrease costs. The higher the relevance of your ad copy, the higher your ad’s position to reduce the CPC.
Instagram is a widely popular social media platform worldwide and is still rising as a casual interaction medium and an advertising and business channel. While thousands create ads, promote ads & use it to conduct business, it is still an unsaturated market.
Whether you are a business that is starting or has been in the market for a long time, you should stay relevant to your audience and use Instagram as an effective medium to grow your brand. It might become a better source of revenue, engagement, and awareness than Facebook.
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If you’re running an e-commerce or retail business, you already know that visibility is everything. The best product in the world won’t sell if no one sees it. That’s where paid ads for ecommerce comes in.
Done right, they drive traffic, conversions, and repeat customers.
Done wrong, they drain your budget and leave you wondering what went wrong.
Whether you’re spending $500 a month or $50,000, your goal is the same: profitability. Not just clicks, and certainly not just impressions. You want to turn ad dollars into real, predictable revenue.
So how do top-performing e-commerce and retail brands make their paid ads work?
What are they doing that you’re not?
This guide breaks it down step-by-step, so you can start running profitable ads with confidence.
Before you launch a single campaign, you need clarity on your audience and goals. Are you trying to boost first-time sales? Increase average order value? Each objective requires a different strategy and metrics for success.
Don’t fall into the trap of launching ads just to “see what happens.” Paid media works best when it’s part of a bigger strategy. So before you log in to Google Ads or Meta Ads Manager, get specific about what success looks like.
If you want to run profitable paid ads, knowing your numbers is the foundation of your entire strategy. Without a clear understanding of your margins, break-even points, and how much you can afford to spend to acquire a customer, you’re essentially gambling with your ad budget.
And in e-commerce, that can get expensive fast.
Let’s start with the most critical numbers you need to know:
Your break-even ROAS tells you the minimum return you need on your ad spend to not lose money. It’s calculated by dividing 1 by your gross profit margin.
So if your margin is 50 percent, your break-even ROAS is 2.0. That means for every $1 you spend on ads, you need to make $2 in sales just to break even.
For example, let’s say you’re running Facebook Ads and spending $1,000 on a campaign. If your break-even ROAS is 2.0, you need to generate at least $2,000 in revenue to avoid losing money. Anything above that is profit. Anything below that eats into your cash.
Once you know your numbers, you can reverse-engineer your ad strategy instead of throwing money into the void and hoping for results. For instance, if your AOV is low (say $25), you might struggle to profit from ads unless you have a very low COGS or high conversion rates. In that case, you might want to:
On the other hand, if your AOV is $150 and your margins are strong, you have more room to compete in ad auctions, bid more aggressively, and test multiple audiences and creatives without instantly wiping out your profit.
A lot of beginner advertisers focus entirely on immediate return from ads. That’s understandable – but short-sighted. If you’re breaking even or slightly losing on the first sale, that might still be a smart move if you’re building long-term customer relationships.
That’s where Customer Lifetime Value (LTV) comes in. If you know that your average customer places three orders a year, each worth $60, then their LTV is $180. If you spend $40 to acquire that customer with your first ad, but earn $140 more over the next 12 months, that ad was extremely profitable in the long run.
Top e-commerce brands build their paid strategies around LTV-to-CAC ratio – how much they earn over time compared to what they paid to acquire the customer.
A healthy ratio is usually 3:1 or higher. So if you’re spending $50 to acquire a customer, you want to earn at least $150 from that customer over time.
Once you understand your numbers, you can plan your ad spend with precision. You’ll know exactly:
Let’s say you want to make $5,000 in profit this month, and your product has a 50 percent gross margin. That means you need $10,000 in sales. If your target ROAS is 2.5, you can spend up to $4,000 in ad spend to hit that goal. With those numbers in hand, you now have a roadmap for campaign budgeting, not just a shot in the dark.
Every ad platform has strengths. But if you try to use them all at once, you’ll burn through your budget without learning much. Instead, pick one or two that align best with your business model and customer behavior.
If you’re selling visually appealing products like apparel, skincare, or home goods, platforms like Instagram and TikTok can deliver strong returns – especially with the right creative. If you’re focused on high-intent buyers, Google Search and Shopping Ads are goldmines. And if you’re targeting professionals or B2B retail buyers, LinkedIn may offer surprising results.
Test channels strategically. Start with the one that matches where your customers spend their time and scale from there. The best platform for you is the one where your ideal customers are already shopping, scrolling, or searching.
One of the biggest mistakes retailers make is casting too wide a net. You don’t want everyone to see your ad – you want the right people to see it.
On Google, this means targeting high-intent keywords that signal buying behavior. Focus on terms like “buy,” “best,” “free shipping,” or product-specific searches. On Facebook, Instagram, or TikTok, you’ll want to dial in your custom audiences using demographic data, lookalikes, interests, and behavior.
Don’t forget retargeting. Most people won’t buy the first time they visit your site, but retargeting brings them back when they’re ready. Set up ads that follow people who viewed a product, added to cart, or engaged with your brand but didn’t check out.
The more relevant your targeting, the more efficient your spend and the higher your return.
Creative is the make-or-break factor in most e-commerce ad campaigns. You can have perfect targeting and the right product, but if your ad doesn’t grab attention in the first two seconds, it won’t convert.
Your creative needs to do three things quickly:
Use high-quality product photos or videos. Show your product in action. Highlight a clear benefit or solve a specific problem. Incorporate customer reviews or user-generated content to build trust.
For paid social, test multiple creatives at once – video vs. image, UGC vs. branded, short-form vs. long-form – and let performance data guide your iterations. On search platforms like Google, focus on copy that’s compelling and packed with relevant keywords. Test different headlines and descriptions to see what gets the best click-through rate.
Sending paid traffic to your homepage is a rookie mistake. You want every click to land on a page that’s designed to convert. That means fast load times, mobile optimization, and a clear call-to-action.
If you’re promoting a specific product, send users to that product page and not your full catalog. If you’re offering a bundle or a seasonal deal, create a dedicated landing page with copy, visuals, and layout tailored to that offer.
Remove distractions. Reduce friction. Make it stupid-easy for people to buy. The less effort it takes, the more sales you’ll see. And don’t forget to A/B test. Sometimes a simple tweak to your headline or CTA can double your conversion rate overnight.
Once your ads are live, your job isn’t done. In fact, this is where it really begins. You need to monitor performance regularly, looking at more than just the surface-level metrics.
Click-through rate (CTR) tells you how well your ad is capturing attention. Conversion rate shows how well your landing page is sealing the deal. ROAS tells you how profitable your campaign is. And CPA helps you compare efficiency across different products or audiences.
Watch for early indicators of success – or failure.
Treat your campaigns like living systems. Tweak, test, and improve them continuously.
Once you find a winning combination – an ad, offer, and audience that works – it’s time to scale. Increase your budget gradually while keeping an eye on performance. Scaling too fast can tank your results, so go step by step.
Duplicate high-performing campaigns to test new audiences or creatives. Experiment with upsells, bundles, or time-limited offers to increase AOV. Layer in email or SMS marketing to retarget paid traffic and drive repeat sales.
And just as importantly, don’t be afraid to kill underperforming ads. If something isn’t working after a reasonable test period, cut it. Your budget should be flowing to what works – not what you hope will work.
One of the biggest mistakes in paid advertising is chasing one-off sales without thinking about the bigger picture. Winning e-commerce brands think in terms of customer lifetime value.
If your first sale breaks even, that’s fine. (As long as you have a plan to turn that customer into a repeat buyer. ) You can use post-purchase emails, loyalty programs, and retargeting ads to bring people back.
At the end of the day, when you view paid ads as the beginning of a customer relationship – not the end – you unlock real long-term profitability. And at PPC.co, that’s where we want to help you! We offer industry-leading PPC management services for ecommerce and retail brands who want to stop wasting ad spend and start generating real ROI.
Contact us today to learn more!
